CAIRO, Sept 17 (Reuters) - Egypt cancelled a treasury bond auction on Monday, its third such move in as many weeks, as foreign investors cut their exposure to the country’s debt at a time of weak appetite globally for emerging market assets.

Data from the central bank showed it had called off the auction of 3- and 7-year treasury bonds worth 3.5 billion Egyptian pounds ($195.97 million). Two previous T-bond auctions, also for 3.5 billion pounds each, had been cancelled after bankers and investors demanded high yields on the debt.

“The finance ministry has been cancelling the bond auctions for the past few weeks due to higher yields than they are willing to accept,” said one banker at an Egyptian bank.

Bankers had been expecting yields of around 18.8 percent in Monday’s cancelled sale, he said.

Egypt aims to reach an average interest rate on government debt instruments in the current 2018-2019 budget of about 14.7 percent compared with 18.5 percent in fiscal year 2017-2018, which ended on June 30.

Egypt’s funding needs in the 2018-2019 budget are about 714.637 billion pounds, of which 511.208 billion are in the form of domestic debt instruments and the rest are external financing from the issuance of bonds and an IMF loan.

Emerging markets generally have been shaken by an escalating trade war between the United States and China, as well as interest rate increases by the Federal Reserve which are attracting funds back to the United States.

Egyptian stocks fell 0.5 percent on Monday after slumping 3.6 percent on Sunday to mid-February lows in their biggest one-day loss since January 2017.

Allen Sandeep, head of research at Naeem Brokerage, noted the weakness across emerging markets.

“It shows that foreigners are cutting their exposure to Egyptian treasuries, but whether they are repatriating their dollars out of Egypt we still don’t know,” he said.

“August and September has been as bad as June in terms of lower foreign buying — there could be another $2-3 billion drop in total foreign holdings.”

Foreign holdings of Egyptian treasuries stood at $17.1 billion at the end of July, down from $23.1 billion at the end of March. ($1 = 17.8600 Egyptian pounds) (Reporting by Eric Knecht and Patrick Werr Writing by Aidan Lewis Editing by Matthew Mpoke Bigg and David Stamp)